Hon Hai Precision’s OEM handset unit FIH Mobile issued a profit warning, forecasting an 85-90 per cent drop in earnings for the first half of the year as smartphone demand continues to weaken.

Foxconn’s Hong Kong-listed subsidiary expects revenue to fall 36 per cent in the first half of the year to below $2.5 billion and earnings to drop from $129 million a year ago to just $10 million – $20 million, it said in a statement filed to the Hong Kong stock exchange.

The announcement sent Hon Hai’s share price to a three-year low on Taiwan Stock Exchange Friday.

Taiwan-based Hon Hai, better known as Foxconn, is the world’s largest contract manufacturer of electronics goods and a key supplier for Apple, which two weeks ago announced its first decline in iPhone sales since the iconic device was launched in 2007.

Apple also reported its first revenue decline in 13 years and a 22 per cent drop in its profit in Q1. iPhone sales in Greater China fell 26 per cent in the quarter.

In mid-April Apple again reduced production of iPhones due to weak sales of its flagship iPhone 6s models and rising inventory levels, Japan’s Nikkei newspaper reported.

Apple is not the only vendor facing declining demand. Strategy Analytics reported that the global smartphone market decreased 3 per cent in Q1 to 335 million units.